Question Types: Estimation
Know Your Stats
Here are some basic stats that would be handy in the estimation interview.
- General Knowledge
- 315 million people in the States
- 2.5 people per household
- 70 year life expectancy
- Industry specific – Look up the market cap of your target industry
- Online ads: $300B digital advertising spent worldwide
- Ecommerce: $3.5T
- Healthcare: $5T
- Use the 80/20 rule: Identify the 20% area you should be spending energy on and deploy your resources on it.
- 80% of traffic is on 20% of the roads
- 80% of a company’s revenue is generated from 20% of customers
- 80% of the product experience comes from the 20% of the UI
Derive the Stats
Once you know the basic statistics, try to derive a few on your own:
- of college new grads = 300 M people / 70 life expectancy = 4.28 M new grads each year
- storage is #users * #photos per user * #size
- ads cost = click through rate * cost per click
The 5-Step Estimation Formula
- Step 1 Clarify the intention
- Are you expecting an actual number or just thought process?
- Do I get any additional background information?
- Step 2 Start making a few assumptions and write the assumptions on one side of the whiteboard.
- “I’m going to list some assumptions and do the calculations along the way.”
- “I will first do a top-down analysis and double check it with a bottom-up one.”
- Step 3 Do a top down analysis
- Start from the total addressable market (aka anyone who can afford it).
- Use the three core questions in How to Nail Your Design Interviews to define the niche.
- Step 4 Do a bottom up analysis
- Start from the smallest unit
- Now is a good time to ask the interviewer: “If you approve, I’ll brainstorm solutions for this use case.”
- Step 5 Usually the interviewer would ask you to do bottom up and top down. If there is any huge discrepancy, be prepared to explain why (go back to your assumptions!)
- What’s the revenue of McDonald’s?
- How many queries per second does Gmail get?
- How many elevators do you need for a 50-story building?
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